Senators Urge Treasury Secretary to Curb ‘Dark Money’ Campaign Spending

Treasury Secretary and former Federal Reserve Chair Janet Yellen holds a news conference after a two-day Federal Open Market Committee (FOMC) meeting in Washington, on Dec. 13, 2017. (Jonathan Ernst/Reuters)

Sens. Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.) urged Treasury Secretary Janet Yellen to crack down on “dark money” spending in political campaigns.

In a letter to Yellen (pdf), the two senators argued for the Treasury Department and the Internal Revenue Service (IRS) to impose curbs on campaign spending by nonprofit organizations formed as 501(c)(4) groups, which under current laws aren’t obliged to disclose the source of their contributions.

“The IRS’s regulation and enforcement related to 501(c)(4) organizations has been woefully inadequate in the post-Citizens United era,” they wrote. “We urge you to undertake a careful review of what the IRS has done, reform its approach, and rein in abuse by ‘dark money’ organizations.”

In 2010, the U.S. Supreme Court ruled in the Citizens United v. the Federal Election Commission case, in a 5–4 split decision, to reverse longstanding campaign finance restrictions, effectively enabling corporations and other outside groups to spend unlimited funds on elections.

“Our most powerful political forces now hide from open debate and public accountability by virtue of having interposed a one-way mirror between themselves and the public sphere,” Warren and Whitehouse wrote in their letter. “The result has been widely described as a ‘tsunami of slime.’”

The senators are asking Yellen to rein in the subsequent explosion of dark money spending on campaigns by enforcing regulations they say have been skirted by nonprofits since the ruling went into effect.

They’re also asking Yellen to back California Attorney General Xavier Becerra in a case in which a nonprofit organization is challenging a regulation in California that requires nonprofits to disclose donor information. That case, the Americans for Prosperity Foundation v. Becerra, is expected to go to the U.S. Supreme Court.

“Americans for Prosperity, and an armada of dark money-funded amici, are seeking constitutional protection for the dark money scheme,” the senators wrote.

“We have already seen dark money groups assert such a constitutional right in response to Congressional inquiries. Such a ruling would imperil federal disclosure rules upon which the IRS relies to enforce its own regulations.

“As members of the Senate both before and after Citizens United, we can personally attest to the corrosive influence of dark money. We hope that under your leadership, Treasury will reexamine how it regulates dark money groups and restore transparency to our political landscape.”

Democrats and Republicans both have benefited from dark money contributions, with President Joe Biden receiving an estimated $145 million in untraceable cash in the 2020 election, which was more than 10 times the amount of dark money spent on former President Donald Trump’s reelection bid.